There are 33.2 million small businesses in the United States.
The number of businesses in the United States has steadily been on the rise. This means that even more businesses need to understand how business tax filings work in the US.
There are a few different forms that you can use to submit your tax filing for the year, but Form 1120S is often the most popular. This is because this is one of the simplest and most effective IRS forms that you can use for your business.
Want to learn more about Form 1120S? Here’s a simple tax filing guide on everything you need to know about Form 1120S.
What Is IRS Form 1120s
In simple terms, Form 1120S is an income tax return for registered S Corporations in the United States. This income tax return is a tax document that outlines the income and deductions for your business that year. The report also includes all gains, losses, credits, and other financial information related to the business.
This tax filing is specifically designed for registered S Corporations. The document doesn’t just outline the income and expenses of the business but goes further to include shareholder details. This way, the IRS knows who owns the business and how much of the business they own.
Filing Form 1120S At the Right Time
Just like other S-Corp filings, Form 1120S is due after the end of the financial year for your business. To be specific, Form 1120S must be filed by the 15th day of the 3rd month after your financial year end. This means that if your financial year end is in March, you need to file by the 15th of June.
Who Should File Form 1120S?
Form 1120S is filed by S Corporations to declare their income and deductions for the year. This filing is only accepted once the IRS receives and accepts the election that the S Corporation has less than 100 shareholders. This is to make sure that the company is indeed a small business.
The form may be drafted and completed by a shareholder, executive member, or by a tax professional that understands all the accounting rules and procedures. The form is then filed electronically or by mail.
What’s In IRS Form 1120S?
As mentioned above, Form 1120S is a holistic document that outlines the income and deductions of a business during that financial year. However, there’s more information within this form to help give the IRS a good idea of how your business is doing. Here’s what’s included in the form.
The form includes vital business information such as the corporation name, mailing address, employer identification number, and date of incorporation. In addition to this, the form will outline the total assets held by the business and the business activity code.
Form 1120S breaks down all the income that your business has received throughout the year. This includes all receipts, sales, returns, allowances, gross profit, and other financial income.
Form 1120S also includes a comprehensive list of deductions that your business may have made during the year. This includes all salaries, wages, repairs, bad debts, depreciation, pensions, and taxes. This helps give the IRS a good idea of what your profit for the year will look like.
Tax and Payments
Form 1120S also has a section for tax payments. This includes the excess net passive income and whatever tax penalties you’re required to pay.
Benefits of Form 1120S
There are a few major benefits that come with filing Form 1120S for your business. Here’s a quick look at these benefits.
1. Explains Income Clearly
Form 1120S does a great job at clearly outlining all your business income. From sales to returns, everything is showcased perfectly for the IRS to understand.
2. Highlights Shareholders
What makes Form 1120S unique is that it also highlights the shareholders in the business. This allows the IRS to see exactly who owns the business and how much of the business they own.
3. Makes Calculating Refunds Easy
Since the shareholders are included in this document, the IRS knows exactly who the owners are. This makes it simple and easy to calculate tax returns for everyone involved.
How To File Form 1120S
The benefit of filing Form 1120S for your business is that you can file electronically or via the mail. Small business owners can complete the entire tax document using tax software and online platforms. This helps speed up the entire process.
Once your documents are all completed, you can then electronically file them to the IRS. The majority of these online platforms also offer this service so that you don’t have to worry about the filing process. If your business hired a tax professional to handle the filings, they’ll know exactly what to do with your documents.
While many people don’t like online tax platforms, they are much more affordable than hiring a tax professional for your business. In this way, they are the ideal solution for small businesses.
Contact ERC Today About Filing Your Taxes
When it comes to filing the annual tax return for your business, Form 1120S is the simplest option. This tax form clearly outlines your total income, deductions, and tax payments throughout the year. The best part about this form is that it also notes the shareholding of the business so tax returns can be completed efficiently.
It’s important to not forget any tax credits that you may qualify for when doing your annual taxes. If you want more information on claiming the ERC, don’t hesitate to reach out to us. You can get the process started through our online application.
Filing Form 1120S FAQs
Form 1120S includes vital business information, such as the corporation name, mailing address, employer identification number, and date of incorporation. It also outlines the total assets held by the business and the business activity code.
Form 1120S breaks down all the income received by the business throughout the year, including receipts, sales, returns, allowances, gross profit, and other financial income.
Form 1120S includes a comprehensive list of deductions made by the business during the year, such as salaries, wages, repairs, bad debts, depreciation, pensions, and taxes.
Filing Form 1120S has several benefits, including clear outlining of business income, highlighting shareholders and their ownership percentages, and making tax return calculations easier for everyone involved.